NEW YORK Boeing Co (BA.N) made a revised offer to the union representing its 23,000 engineering employees on Friday.
The improved offer came on the same day the U.S. government ordered a review of the firm's 787 Dreamliner following a string of mechanical and electrical problems.
Boeing and the union are meeting this week to renew a contract that expired in November. Federal mediators joined the talks in December after the talks appeared at an impasse.
Boeing's new offer boosted raises for professional workers by 5 percent in each of the first two years of the four-year agreement, and 4 percent in each of the remaining workers.
Technicians, a separate category, would get 4 percent raises all four years.
The offer left other contract provisions, including healthcare and retirement benefits, unchanged.
"We believe this offer is market-leading by every definition," said Mike Delaney, a vice president of engineering at Boeing's commercial airplane division and a member of Boeing's negotiations team.
The new raises compare with 4 percent to 4.5 percent offered previously for professional engineers and 3 percent to 3.5 percent for technicians.
Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace, said the offer would reduce salary growth, increase medical costs and eliminate the pension "all from a company posting record profits."
The offer capped three days of talks in Seattle with federal mediators this week, and followed a break in December. The union has not authorized a strike, but has been conducting strike training and Goforth has said a strike appears likely.
The U.S. government on Friday mandated a wide-ranging review of the design and manufacturing of Boeing's latest passenger jet, the 787 Dreamliner, citing concern over a fire and other recent problems but insisting the plane was still safe to fly.
Delaney, the Boeing executive, said the company has contingency plans in case the engineers go on strike during the review.
"We are the Boeing company and I have access to significant resources across the entire corporation," he said, noting an engineering team in California.
"So while we want to get to an agreement ... we want a deal that works for the company both short-term and long term. We have contingency plans here."
(Reporting by Alwyn Scott; editing by John Wallace)